Financial distress is a condition in which an area experiencing financial
difficulties. This study aims to examine the effect of financial independence,
decentralization, and the solvency of the prediction of financial distress in the
local government district or city in Indonesia listed in the Board of Audit of the
Republic of Indonesia and the Director General of the Financial Balance of Local
Government in 2010-2013.
The sampling method with a purposive sampling according to criteria that
have been determined. The number of samples collected as many as 40 districts or
cities. The collected data were analyzed using logistic regression analysis. The
results showed that the variables of financial independence and thesolvency affect
the financial distress prediction while decentralization variable does not affect the
prediction of financial distress
